Trade Idea – Call Zebra on MSTZ

Disclaimer: The trades discussed in this blog reflect the author's personal strategies and decisions. These are not financial advice and should not be considered recommendations to buy, sell, or hold any financial instruments. The author is not a licensed financial advisor. Options trading carries significant risk, and readers should perform their own research or consult a qualified financial advisor before making any investment decisions. Past performance does not guarantee future results.

Lately, I’ve been keeping an eye on MSTZ, a 2x inverse ETF tied to MicroStrategy (MSTR), as an interesting proxy trade around crypto sentiment. While I typically steer clear of direct crypto plays or highly leveraged instruments, a setup uncovered using our custom scan feature caught my attention - a low-risk, high-upside call zebra that could capitalize on any near-term weakness in MSTR or Bitcoin.

The Trade

I’ve opened a call zebra on MSTZ, which is structured to benefit significantly if the ETF rebounds modestly from current levels, while keeping losses minimal if the thesis doesn’t pan out.

MSTZ Call Zebra

• Buy 2 Call Options @ $5 strike
• Sell 1 Call Option @ $5.5 strike
• Expiration: Approximately one month out

The P&L is the following:

Key Metrics:

• Max Loss: $92.50 if MSTZ drops below $5
• Breakeven: $5.46
• Max Gain: Unlimited upside if MSTZ rises significantly

I like ZEBRAs for directional plays when you want long delta exposure but aren’t willing to commit to a high capital outlay or unlimited downside. With MSTZ trading near $5, the setup gives me asymmetric exposure to a potential rebound, while the cost basis remains tightly controlled.

Why I Like This Setup Now

MSTZ has taken a beating, falling from over $17 just two months ago to near $5. In fact, look at the chart:

That’s a steep decline, even for a leveraged product. While this kind of drawdown isn’t unusual in inverse or leveraged ETFs, it creates a compelling case for a tactical bounce, especially if BTC takes a breather and MSTR experiences a short-term pullback.

MSTR’s price is closely correlated with Bitcoin, and with crypto markets running hot recently, a pause or mild correction wouldn’t be unexpected. MSTZ, being a 2x inverse ETF on MSTR, stands to benefit from such a scenario. The beauty of this trade is that it doesn't require a major reversal - just a move back toward the $6-$7 range over the next few weeks could generate meaningful returns.

Risk/Reward Profile

The worst-case scenario is simple: MSTZ stays below $5, and the call zebra expires worthless, resulting in a max loss under $100. That’s a price I’m willing to pay for a setup with unlimited upside if the trade moves in my favor. Above the $5.46 breakeven point, profits begin to accumulate, with optimal gains if MSTZ makes a sharp upside move.

As with all trades involving leveraged and inverse ETFs, timing and direction are everything. This is not a long-term investment - it’s a swing trade designed to capitalize on a near-term dislocation or sentiment shift.

If you like these trades, you will definitely enjoy our custom scan feature, which we really feel is a way to find trades you cannot find anywhere else. For transparency, you can find all my trades in the public trade log.